Should You Play the Lottery?

The lottery is the game of chance that provides the winner with a prize — often millions of dollars — for an entry fee. The prize amount, the odds of winning, and the consideration of purchasing a ticket to enter determine whether or not playing the lottery represents a rational choice for a particular individual.

Lotteries have a long history in America, beginning with Benjamin Franklin’s unsuccessful attempt to hold a lottery to raise funds for cannons to defend Philadelphia during the American Revolution. Lotteries grew into a major source of public funding for infrastructure projects and schools.

State lotteries operate as traditional raffles, with the public buying tickets for a drawing held at some future date, often weeks or even months away. But innovations in the 1970s led to a major transformation of the industry, with lotteries offering “instant games” such as scratch-off tickets. These games are much shorter in duration than the traditional drawings, with smaller prize amounts and relatively high odds of winning – on the order of 1 in 4.

These games fueled rapid growth for the lottery industry, which now comprises 44 states, plus the District of Columbia. But these instant games also have the potential to cause a problem: “lottery fatigue.” After a short period of explosive growth, the popularity of an instant game begins to plateau and, in some cases, even decline. Lottery officials respond to this phenomenon by introducing new games in order to maintain or increase revenues.

Most people who play the lottery have a clear understanding of how the games work and the odds of winning. For these individuals, the expected utility of a monetary gain outweighs the disutility of losing money. But the vast majority of lottery players buy tickets for a game they know will not result in a large prize, or even in the unlikely event that they win, the total value of their winnings will be modest in comparison to the total cost of their purchases.

Many people participate in lottery pools. These pools involve a group of coworkers each contributing a small amount to purchase tickets. The pool manager then selects the winning numbers. A common strategy is to play “lucky” numbers, such as birthdays and anniversaries. The logic behind this strategy is flawed; playing a number that has been overdue for awhile doesn’t improve the odds of winning.

The adage that you should never buy lottery tickets unless you have at least $800 in your emergency fund is misleading. Americans spend more than $80 billion a year on lottery tickets, and many of these purchases could be better used to build an emergency fund or pay down credit card debt. Lottery spending is a serious problem that should be addressed by Congress and the president, but this will require a significant commitment of political capital and resources. A comprehensive national strategy is needed to reduce the number of people who spend money on lottery tickets and increase the percentage of those who do not.